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How to Choose a New Water Heater Tank

November 18, 2021

Plumbers inspecting a water heater

Updated December 2022

Need a new water heater tank for your Phoenix home? Whether you have a hot water heater that’s leaking or the water is no longer warm, we’ll walk you through all the parts of a water heater tank to consider when replacing your unit.

When you’re replacing a water heater tank, there are a few things you need to keep in mind:

  • The size of the tank: small or large
  • The energy source: gas or electric
  • The efficiency rating of the tank
  • The installation costs

Below, we'll take a look at each of these to help you make the most sound investment for your replacement water heater tank.

Want a professional’s opinion? Contact Patrick Riley, and we'll help you go over each water heater option for Phoenix homes. We offer clear and upfront prices, as well as flexible financing options.

How to choose your tank size

Larger water heater tanks will cost more — that’s just a fact of life. Though some Phoenix homeowners think they can save money by buying a smaller tank, it’s important to find the right tank for your needs.

If your tank is too small, you’ll constantly run out of hot water. You’ll pay higher utility costs to heat the remaining cold water at a higher temperature to meet your family’s demands. If your household needs a larger-sized tank, the investment will pay for itself.

On the other hand, if you purchase a tank that’s too big, you’ll waste money heating water you won’t use. The heater may require additional repair costs due to infrequent use.

To avoid wasting money or energy, finding the right size for your home is important. You can do this in two ways:

1. Compare your household size with water consumption

To get a reasonable estimate, take a look at the chart below to match your household size with the appropriate water heater tank size:

What size water heater do I need with household size?

In the chart, the right water heater tank size is determined by the number of people living in your home. For example, if you have more than two people living in your home, you’ll probably want a 40-gallon water heater tank at the very least.

2. Calculate your “peak hour demand” for accuracy

Some households run multiple hot water fixtures or appliances at a time — such as a kitchen faucet, a washing machine, and bathroom showers. You’ll need a water heater that can keep up with your peak hour of demand. You might only have a two-person household, but if you use more than 30 gallons of hot water all at once, you’ll run out of hot water just as if you had more people living with you.

The good news is there’s an easy way to calculate your peak hot water consumption to find the right size of tank water heater to accommodate your needs.

First, visit and fill out their worksheet to estimate your “peak hour demand.” This refers to the amount of gallons of hot water you use at the time of day you frequently use it.

Worksheet for estimating your water heater’s peak hour demand and first hour rating

After you’ve found out your peak hour demand, be sure the water heater you’re looking at has a “first hour rating” (FHR) within one to three gallons of that number.

“First hour rating” refers to the amount of hot water the water heater can produce in a given hour. Although you may think, “Shouldn’t I buy a 40-gallon tank to produce 40 gallons of hot water at once?” — that’s not the way it works.

Once you turn on the hot water tap and hot water flows to your faucet or appliance, new cold water will begin to flow into the tank to refill it. Once the tank is more than two-thirds empty, the majority of the tank will likely be too cold for your liking, which means you’ll have to wait for more hot water.

First hour ratings provide a realistic estimate for how many guaranteed gallons of hot water you use in an hour.

When you’re shopping for a new water heater tank, you’ll notice that most have an “Energy Guide” label attached that provides the FHR rating.

How to choose between gas vs. electric water heaters

Tank water heaters use either gas or electricity for fuel. In general, hot water heaters that use gas are more expensive. The required venting and safety precautions from a certified gas technician for gas-power increases installation costs. However, this higher installation cost is balanced by reduced utility expenses since gas generally costs less on average than electricity.

Depending on your location, you might not be able to set up a gas line for your water heater tank, so an electric water heater might be your only option.

However, you can generate your own electricity with a solar system, so an electric water heater would be a great option for fuel efficiency and savings.

When installing a new hot water heater, there are advantages and disadvantages to consider when using gas or electricity to fuel it. For a quick reference guide, see the below chart:

Pros vs. cons of gas and electric water heater

How to understand an efficiency rating

Most tank water heaters have an “energy factor” (EF) rating. EF ratings usually indicate how well insulated the tanks are for retaining heat and in what ways they consistently heat new flowing water.

A high EF means a water heater is more efficient, and it comes at a higher price point.

For gas-powered water heaters, we recommend you select a water heater with an EF of 0.60 or higher.

For electric water heaters, we recommend an EF of 0.90 or higher.

You can find the EF ratings on the product listing or description. If you can’t find them there, check the manufacturer’s label on the outside of the tank.

Note: Electric water heaters generally have higher EF ratings. Combined with a solar system, this means big-time savings! However, for homes linked to the grid, an electric water heater with a high EF rating doesn’t necessarily guarantee lower expenses, as electricity from your electric company will cost more than gas.

How Much Does It Cost to Install a Water Heater Tank in Phoenix?

In Phoenix, the cost to install or replace a tank water heater typically ranges from $1,800 to $2,800, with a textbook estimate of $2,200.

Aside from the purchase price of your new tank water heater, it’s important to budget for installation because that’s where the majority of your costs will be.

Two significant cost factors present themselves when replacing a water heater:

1. The difficulty of installation

The more work the water heater requires, the more expensive it will be. Some examples include:

  • Plumbing that isn’t up to code and needs an update
  • New hot water heater gas lines or vents that need to be installed
  • Tight spaces or areas that take more time to access
  • Potential space modifications to accommodate a larger tank

2. Your choice of plumber or contractor

In general, more experienced plumbers will charge more for their services, reflecting their expertise, quality, and commitment to excellence. Don’t risk paying twice to fix a low-effort installation. When you’re searching for a trustworthy plumber or contractor, look for these qualifications:

  • Proof of licensing and insurance
  • 10+ years of experience
  • Recent, positive online reviews on sites like Google, Angi, and Facebook
  • Honest, transparent pricing
  • Written guarantee of work to be completed

Need a new water heater tank? Hire the best in Phoenix: Patrick Riley!

Ask us for a free quote to learn how much it will cost to replace a water heater tank in Chandler or other areas in the greater Phoenix area. Give us a call at (602) 286-0027, and we’ll send one of our expert plumbers at the agreed-upon time. We offer upfront prices, so you’ll never get a surprise bill!

Are you looking for another plumbing service? We offer a full suite of plumbing replacement and repair services. Visit our plumbing services page to learn more.

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